Written by The Edge
Mainboard-listed Del Monte Pacific (Bloomberg: DELM SP, Reuters: DMPL.SI) today announced a net loss of US$1.3 million ($1.76 million) for the second quarter of 2010 compared to a net profit of US$5.1 million in the same period last year. The loss was due primarily to higher raw material costs and inventory obsolescence, despite an 8% improvement in sales.
Sales grew to US$85.1 million from US$78.9 million in the prior year quarter due to higher turnover in the Philippines and fresh exports.
Sales in the Philippines grew 13%, higher than the 2% growth registered in the first quarter.
This was due to higher sales in the culinary category, led by core products such as spaghetti and tomato sauces, as well as mixed fruits, pineapple products and canned juice drinks, resulting in higher market shares.
The beverage segment was marginally down by 1% as higher sales in other juice products offset the decline in Del Monte Fit ‘n Right juice drinks.
Del Monte Pacific says Fit ‘n Right continues to face aggressive competition and the company is taking steps to address this with a product relaunch supported by a new, refreshed advertising campaign.
For the quarter, the company recognised a share of loss in FieldFresh India of US$2.2 million, which was higher than the US$1.0 million recorded in the same period last year.
This was due to necessary expenses to build the business primarily in the Del Monte branded processed foods segment.
New products Del Monte Zingo and Twango tomato/chili ketchup launched last April were supported by A&P programmes.
Both are performing in line with expectation and have strengthened the Culinary portfolio for Del Monte in India.
From only 15,000 outlets early this year, Del Monte products are now in 23,000 outlets in 25 cities in India. The new production facility of FieldFresh will be fully operational in the fourth quarter and will support the growth and profitability of the processed foods business.
Joselito D. Campos, Jr., Managing Director and CEO of Del Monte Pacific says: “We expect improvement in the second half performance, particularly in the fourth quarter, from better volume, pricing and sales mix, and containment of costs.”
Dividend : None
